By now I'm sure you have read about the
LBGC and McCullough Field issues in the Laurel Leader. I was serving on the City Council when the land transfer took place and I can assure you that there was never any intent to transfer the field to the Club.
The City's role in the transfer of the old Laurel High School and Phelps Center property was minor. The city had the right of first refusal on that property. We negotiated using our refusal to allow the Club to obtain the property in return for continuing the lease on the Phelps Center until a new Senior Center could be built. The field was not part of the deal.
Setting aside the invalid McCullough property transfer, I felt then and continue to believe now that the old Laurel High School property was a bad strategy for the Club. The burden of owning an old historic building, with millions of dollars worth of needed repairs would ultimately drown the club financially and most importantly, divert the attention of the volunteers from their core role of providing youth sports programs.
I was subsequently appointed to an advisory committee serving the LBGC board of directors and after a number of meetings and digging into the finances, I sustained my original opinion. I believed then that without significant yearly government grants, the club could not both restore the building to code and also provide quality core sports programs. Living off of grants was simply too risky a bet to build a credible strategy for the future.
Now we are engaged in a debate about county grants for the Club. The LBGC leadership feels that County Councilman Dernoga unfairly denied them their funds. I've included Tom Dernoga's letter explaining this issue below.
I am also concerned that some members associated with the club may be unknowingly jepoardizing the
LBGC's tax exempt status by engaging in political activity. The IRS rules are very clear. There are also clear rules severely limiting political activity by organizations receiving state or federal grants.
I encourage all sides to use the
comments section of Connections to raise issues and ask questions.
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August 29, 2006
Re: Laurel Boys & Girls Club Funding
Dear Community Member:
As I promised, I am writing in response to many inquiries about whether I reallocated $200,000 of funds that had been promised to the Laurel Boys & Girls Club (LBGC). Actually, in FY 2006, I did provide the $200,000 that I had promised to the Club for renovations. I have been one of LBGC’s biggest benefactors the past five years. However, it is true that I did not seek to fight to keep an additional $200,000 proposed for LBGC for FY 2007 (known as Year P32 for Community Development Block Grant (“CDBG”) purposes).
There are numerous reasons for my decision not to use my influence to seek these additional funds at this time. These reasons include:
· Payments for Property Taxes.
· Internal disputes.
· Lack of a Certified Audit.
· Payments for Attorneys Fees.
· Substantial Out of County participation.
· Disputes with the City of Laurel.
Contrary to what has been stated, I informed Levet Brown of this result when I met with him and Patrick Reed on July 12th. I did leave open possibility of seeking additional funds next year. I explained to Mr. Brown and Mr. Reed why I was unwilling to support additional funding to LBGC at this time and what LBGC would need to do to obtain additional funding. I am concerned that in his recent emails to the public, Mr. Brown claims to have just learned last week about the funding for FY 2007 and to have no knowledge of my rationale; and that therefore, members should contact me to urge me to explain the situation. In doing so, Mr. Brown is making me, and other officials, publicly address matters that may not reflect well on the LBGC. I regret that.
While not the sole reason, a significant reason is that I decided not to pursue additional funds for this fiscal year is that I have concerns about the leadership of the LBGC and the actions that I have observed over the past 15 months. I have a fiduciary obligation to the County taxpayers, and I take this obligation very seriously. I also have expectations about principles, and the LBGC leadership and I have different views. I will discuss this below.
Background
First, LBGC has not been a major recipient of County funding until recently. It has largely been self-sufficient, but in the past couple of years, there have been several claims of financial crisis and requests for stop-gap funding. Here is a breakdown of funding since 1996:
Prior To Taking Office Since Taking Office
Fiscal Year Amount Fiscal Year Amount
FY 1996 $ 0 FY 2003 $ 13,500*
FY 1997 $ 0 FY 2004 $ 12,500
FY 1998 $ 0 FY 2005 $ 15,500*
FY 1999 $ 10,250 FY 2006 $256,000*
FY 2000 $ 0
FY 2001 $ 10,000
FY 2002 $ 10,000
*County Executive Jack Johnson provided grants of $1,000 in FY 2003, $3,000 in FY 2005, and $1,000 in FY 2006.
The above Table only shows a fraction of the resources that I have provided to LBGC or that I am in the process of obtaining. Additional Recreational Benefits that I am working to provide to LBGC and area youth in general are listed on Attachment 1.
[1] Also, Attachment 2 provides information on the many projects that I have worked on or have budgeted to address the needs of our public schools. If you have a children in our public schools, please ask your principal if I have been of assistance.
The community has been told that I “reallocated $200,000” that had been promised to LBGC. The community is not being told all that I have already done.
Being a substantial supporter of LBGC, after meeting with Mr. Brown and other Board members during 2004, I offered to find substantial funding for capital improvements to the High School building. During FY 2005, I negotiated with my Council colleagues to obtain a substantial CDBG grant for LBGC for the following fiscal year, FY 2006. I had my staff assist with the application process and walk LBGC through the process. I kept my word, as did my colleagues, and LBGC received a $200,000 CDBG Grant in FY 2006. To date, LBGC has only used about $100,000 of the funds. I also obtained a second CDBG Grant in the amount of $25,000 to assist with program costs. I also obtained $30,000 and inserted it in the Park & Planning Commission FY 2006 budget. Apparently, the community has not been informed that I went to bat for LBGC in FY 2006 and obtained unprecedented funding.
With respect to FY 2007 (i.e., Year P32), the truth is that during this year’s Council budget negotiations, while I obtained substantial funding for many projects in this area – many needed projects – I did not go to bat for this additional funding. In part, I had already pushed the limit the year before and other Council members wanted their share of the funding.
[2] Ultimately, this $200,000 went to two organizations in Councilman Sam Dean’s district that provide services to the poor and disadvantaged (the Mission of Love Charities
[3] and Sparrow’s Nest Ministries). I supported Councilman Dean on a number of funding initiatives, and he supported important projects in my district, including $290,000 for 1st Generation College Bound in Laurel and $200,000 for a community health clinic in Beltsville; $500,000 for the clean-up of Laurel Lakes; $3,000,000 for the gym on the Laurel-Beltsville Elementary School;
While a significant reason for not pushing this issue is that the Council has a “share the pie” approach and I had gotten the District 1 share in FY 2006, I also have concerns about the LBGC leadership. I have been watching the actions and attitude of the leadership for the past 15 months and I am troubled by a number of things. While I know that the LBGC leadership has the interests of youth at heart, and has worked hard for youth, that does not mean that concerns should be overlooked.
Concerns
Transfer of Old Laurel High School & Phelps Senior Center to LBGC: In 2002, the County, the City and LBGC engaged in negotiations to turn ownership of the Old Laurel High School and the Phelps Senior Center over to LBGC. The LBGC leadership of 2002 knew that this would be a tremendous responsibility and require significant fundraising on its part. I supported this transfer of the building and offered future help in fundraising. As part of this transfer, the parties agreed that the Senior Citizen programs run by the City of Laurel would remain in place until a new Senior Citizens Center was constructed. That project is about 2 years from completion.
At no time did anyone intend to transfer McCullough Field to LBGC and LBGC had no expectation of receiving the Field. The County has a long-term lease with the City of Laurel for McCullough Field so that the City may provide for its recreational programs. It shares the field with LBGC. A renewal of the lease arises in 2007.
During the Council review of the transfer approval, I noted that the acreage listed (11 acres) seemed too large for the High School site. I was assured by County Staff that the acreage figure was correct. LBGC has recently discovered that an error was made in the deed transfer of the High School building. The original deed actually includes the parcel for the High School and, in a separate provision, includes McCullough Field. Whoever drafted the transfer documents did not separate the two parcels at the time of transfer. LBGC is now taking the position that it owns McCullough Field. Belying the fact that no one had any intent to transfer the Field, LBGC had never asserted ownership until it stumbled over the error recently.
More about this issue is discussed below.
Payments for Property Taxes: When LBGC obtained ownership of the High School property, LBGC did not conform its activities to comply with Maryland real property tax laws. By renting the facility to outside users, the property became subject to State, County and City real property taxes. This taxation is controlled by State law. In my view, LBGC leadership mishandled this problem and did not seek appropriate advice. When it was brought to my attention, it was too late address the property tax issue for the tax year. Consequently, LBGC lost over $15,000 in tax payments.
My first concern is that due to its desire to conduct business in a manner that creates a taxable situation, my grant of $12,500 did nothing more than offset taxes. I was able to work with LBGC to get a County tax credit for the following years. Nevertheless, LBGC paid over $8,500 in property taxes for FY 2006, but not before the property went to tax sale (costing over $500 in penalties and interest). LBGC owes over $8,000 in property taxes for FY 2007. These taxes are unpaid at this time.
All or part of these taxes is owed to the City of Laurel. This tax situation should be worked out between the two parties, but because of disputes between the parties, there has been no resolution to date. I am unwilling to provide County dollars to fund property tax bills.
Internal disputes: I and other elected officials have been notified of a number of internal disputes that reflect poorly on the working of LBGC. It’s difficult to draw conclusions from complaints, because it is not our role to investigate and take sides on internal disputes. Nonetheless, repeated complaints raise flags about the inability of a group to work collaboratively. I saw a petition from one group of parents last summer demanding the resignation of the Board of Directors and the holding of elections. Apparently, the Board dismissed the complaint and did not hold elections. One repeated complaint that I have heard from various quarters is that dissent is quashed on the Board and that only hand-picked persons are appointed.
Later, the boxing program was ejected from the Club. This resulted in a lawsuit last fall, in part demanding elections since none had been held for about five years. Eventually, the lawsuit was withdrawn and the complainant moved to another club. Elections were finally held earlier this year; however, it is my understanding that only the Directors in office ran for election. This raises a flag as to how open and inclusive the election process was.
These internal disputes were not determinative in my view about LBGC leadership; however, they have created a concern.
Lack of a Certified Audit: LBGC’s accounting controls apparently are so poor that its accountant is refusing to certify its audit. This information comes from County auditors who have reviewed LBGC’s books. This does not mean that there is any impropriety. It does mean that there is a lack of comfort about LBGC’s accounting systems. The current leadership inherited this state of affairs and has promised to take steps to rectify it. Once this is corrected, I will feel more comfortable about the handling of funds.
Another concern raised by the review of LBGC finances is that one individual associated with LBGC has received over $40,000 in contracts to provide renovation related services. Perhaps these are low-cost services that save LBGC funds; however, former Board members raised questions about whether the individual was properly certified or licensed and whether improvements met code requirements.
Payments for Attorneys Fees: The litigation that occurred this year generated attorney’s fees. I believe that the legal services were provided at a reduced rate; however, I have concern that County taxpayer funds may be going to lawyers rather than children because adults cannot work together. As the disputes with the City of Laurel move forward, I am concerned that the LBGC will again be expending funds on attorneys to settle a dispute and I do not want tax dollars subsidizing such activities.
Out of County participation: While not a major issue, this is still a concern. LBGC is focused on being a regional Boys & Girls Club, and is not limiting itself to the City of Laurel or Prince George’s County.
[4] There is nothing wrong with this. However, I have heard a number of complaints about City/County residents not getting opportunities because of commitments to outside groups. And, as the use of Club facilities and resources expands to serve residents of wealthier Counties, I have concern about increasing demands for funding support from Prince George’s County and the City of Laurel. I am unaware of funding being provided by other Counties. I am unaware of any requests for funding having been presented to other Counties.
Recently, LBGC issued a postcard for members to send to the Mayor and City Council demanding funding support from the City. A significant portion of LBGC members reside outside the City of Laurel. I think it is inappropriate for the LBGC Board to stir up ill-feelings toward the City among its members considering the numerous benefits that the City provides to LBGC, and considering that none of these other Counties provide any support. I am unaware that field or gym space is even provided to LBGC by these other jurisdictions.
Disputes with the City of Laurel: The foregoing issues are concerns, but the principal reason for my decision not to push for CDBG grant funding this year relates to disputes with the City of Laurel. At my meeting with Mr. Brown and Mr. Reed on July 12th, I specifically instructed them to resolve their disputes with the City and then I would meet with them to discuss funding options. There has a brief meeting or two with City officials, but I perceive almost no movement. The disputes are as follows:
Increased Rent for the Phelps Senior Center. The City has provided a complete senior program at Phelps for many years. When the County owned the building, it provided space to the City at no cost. In part through my efforts, MNCPPC provides over $120,000 per year to the City to pay for the program. As noted above, when the building was transferred to LBGC, the agreement was for the City’s senior program to stay in place until the Senior Citizens Center is complete. The City and LBGC entered into a lease arrangement.
To address its funding problems, LBGC has looked at market rate lease costs in the area, and is demanding that the City’s rent more than quadruple. In my view, the new LBGC leadership is reneging on the commitments of its predecessors. The state of the City senior programs is in jeopardy and senior leaders are very upset with this action. Not only do I understand LBGC’s concern about funding, but I have been working to find financing for LBGC. My efforts last year are obvious. I have also been working on fundraising efforts and making progress. I am disappointed that rather than a collaborative approach with elected officials, the LBGC leadership has taken a confrontational approach with the City.
The irony of this effort is that since I provide the funding for the City senior program through MNCPPC, while LBGC is negotiating with the City about fair rental value, in part, I will be expected to find the funds to increase support of the senior program in order to pay more rent to LBGC. In that respect, LBGC’s dispute is not with the City itself, but with me, one of its leading financial supporters. I found it difficult to financially support LBGC this year when (1) it is taking a confrontational approach with the City and threatening the viability of the senior program; and (2) when I do not know how much additional funding I will have to provide to pay the additional rent – in essence, additional funding through my efforts to LBGC. This second concern is compounded by consideration of the amount of resources that are allocated to out-of-County members or participants.
McCullough Field. This dispute is the most troubling matter affecting my decisions. As noted above, LBGC recently stumbled across an error in the deed transferring ownership of the High School property to it, and it now claims ownership of McCullough field. Mr. Brown has stated a number of things that I find very troubling. For example:
“The club at this time agreeing to allow the City of Laurel to conduct its programs on this field as long as the Laurel Boys and Girls Club’s programs don’t suffer because the City of Laurel’s usage. However, the club will revisit this issue at a later date in the year 2007.” The lease between the County and City for the use of the Field allows for review in 2007.
“Furthermore, the club feels that from the conversation [Mr. Reed] and I had with you in the meeting in July, you will not be satisfied until we give your constituent’s children field over to the City. You made this very clear to [Mr. Reed] and me. . . . I want to remind you as I stated in our meeting, that I will never be a part of giving these children’s field over to anyone.”
I was an integral participant in the negotiations to transfer the High School building to LBGC for no cost. No one involved in that transaction had an intent to transfer McCullough Field. The City actually has first right of refusal on surplus County property and it waived its right to the benefit of LBGC, but only for the building. The City would have exercised its right with respect to McCullough Field had there been any intent to surplus the land.
I told Mr. Brown and Mr. Reed very clearly that my support for their leadership (or anyone’s) is based on how they conduct themselves. I noted that the lawyers’ error in not separating the two parcels in the deed transfer might stand up in court, and that LBGC may find itself with an unintended windfall. I said that knowing that the Field was never intended to be transferred to LBGC and that such transfer would cause great harm to the City of Laurel, I would look to their actions to determine their character. I used the following analogy:
“A person is walking down the street and drops $100 on the ground. You are walking behind and see this. You pick up the $100 and you have a choice. There is no name on money, so you can put it in your pocket. Or, you can give it back to the person. However, I am walking behind both of you and I see you pick up the $100. What do you think I will say if you put the $100 in your pocket, and then turn and ask me to give you money?”
I believe that the manner in which LBGC handles this issue is a matter of honor and principle. LBGC still has a choice to make, although to date it is giving all indication that it will assert its legal ownership of the land and put the City’s recreational programs in jeopardy. I am disappointed by Mr. Brown’s attempt to hide behind my “constituent’s children field”. The Field belongs to the County and is leased to the City for the City to provide recreational activities to my constituents – including many children. The City does a great job in providing such activities.
Another great irony is that LBGC is taking this action unnecessarily. Review the attached list of projects that I am working on, some intended to specifically benefit LBGC in terms of providing additional facilities.
Based on what I know to date, I am concerned that this dispute will result in more litigation. I will not provide tax dollars to LBGC only to see these funds again go to pay for attorneys.
As noted above, I told Mr. Brown and Mr. Reed on July 12th where I stood on their disputes with the City and that their choices would affect my view of the principles of the LBGC leadership. I told them to resolve their differences and then I would meet. Neither dispute has been resolved.
Apparently frustrated by my position, last week Mr. Brown claimed to have just learned that LBGC did not receive approval for the FY 2007 CDBG grant. Mr. Brown has issued various emails to members stating, without explanation, nothing more than that I have “reallocated $200,000” that had been promised, and asking the members to contact me to get an explanation from me. This message to members had the intended affect on members. I have received about 30 emails demanding an explanation and demanding funding now. Some of these emails were from out-of-county users of the LBGC facilities demanding that I give County funds for their benefit. Some of the emails have been very nasty. I have a thick enough skin to take the slings and arrows. However, it is not lost on me that one of the complaints by former Club members is that Mr. Brown attacks those who disagree with him and seeks to isolate them. It is also not lost on me that a similar tactic is being used against the Mayor and City Council. Attempting to apply public pressure on elected officials is a strategy, but if the elected officials fear that the pressure is created by unfair information, the strategy may be counter-productive.
One point that LBGC has failed to mention in its statements is that I directed LBGC to the CDBG grant program, walked it through the application process, paved the way for approval and secured $225,000 in CDBG funds in FY 2006. Without my assistance, LBGC would not even be aware of the CDBG program. LBGC’s emails are misleading people into thinking that the decision on the CDBG grants is very recent and can be reconsidered. That is not the case. The CDBG program for FY 2007 was approved by the County Council on June 20th, and signed by the County Executive on June 29th. The County Executive never spoke to me about having promised a grant to LBGC; therefore, I think Mr. Brown’s claims about this are overstated.
LBGC may file an application this Fall for next year’s program; however, I believe that the leadership needs to do a self-assessment. Club members may want to discuss the recent actions and strategies with the Club leadership. I look forward to a collaborative relationship with LBGC pursuant to which I can continue to seek to secure funds to support programs for youth. However, I do not want to fund attorneys’ fees, property taxes, and residents of other Counties that do not also contribute to the costs. Nor do I want to fund an organization that has leadership lacking honor.
People may disagree with me on this matter, but I am willing to accept that. I was elected to be a fiduciary and I believe that I have done a good job over the past five years as a fiduciary. I also have obtained tens of millions of dollars to benefit the youth in my District. I have been one of LBGC’s strongest supporters. People can ask what has happened to my support. Or, they can ask whether the present LBGC leadership has its priorities straight. Even if people disagree with my assessment of this situation, I know that I have looked at the matter objectively and made the best decision that I am able. I have taken a position that might be politically unpopular, but that is not a basis for making decisions. I will not be cowed by arguments of “do it for the children.” I have heard those arguments from people such as Dr. Andre’ Hornsby, and I often find that such arguments are a mask to hide substantive issues.
Again, I regret that Mr. Brown has demanded that I publicly address his questions. I think that these discussions with would have better served our youth, the City and our County by being conducted outside the media. However, if explanations of my actions are demanded – if my motivations are impugned – I have no problem explaining the bases of my decisions. I am sure that this issue will continue to be discussed in the future. I assure you that I will act in what I consider to be the best interests of County residents, including our youth. I am confident that we will get past the present set of issues and that LBGC will continue to provide recreational services to our youth.
Sincerely,
Thomas E. Dernoga, Chair
notes
1. Contrary to what some people believe, I am no stranger to LBGC. I was a parent member and served as a soccer coach for years.
2. Typically, the County receives funding requests approximately double the amount of available CDBG funding.
3. Mission of Love Charities, Inc. is a multifaceted health and human services organization dedicated to helping the underserved and misfortunate by providing free programs and services designed to meet their immediate and short-term needs.
4. In a recent letter, Mr. Brown states that “It is the club’s hope that you continue to support the Laurel Boys and Girls Club in its important endeavor, and that is providing a service to the community of Prince George’s, Howard, Anne Arundel and Montgomery County.”
We came home from picking up my number 1 daughter from college tonight and I was thrilled to find my Department of Public Works Resident Information Packet for 2007 hanging on our door. If you live in the City of Laurel, please be sure to find yours, read it carefully and save it away.
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